Big Payday Awaits Chairman After Countrywide Sale
Saturday, January 12, 2008
Angelo R. Mozilo has pocketed $410 million in salary, bonuses and stock-option gains since he became executive chairman of mortgage lender Countrywide Financial in 1999, according to the executive compensation company Equilar.
Now, the man at the center of the national mortgage crisis stands to collect an additional $112 million in severance when Bank of America buys the company he helped found.
Equilar's numbers are based on Countrywide's most recent proxy statement, which is a year old. According to the statement, if Countrywide is acquired and Mozilo leaves, he is entitled to a cash severance of $88 million. He would also receive a retirement package worth $24 million.
Equilar said that most of Mozilo's compensation since becoming chairman -- $285 million -- has come from stock options. Mozilo has been criticized for selling pieces of his stake in Countrywide, cashing in tens of millions of dollars in options as the housing market dropped.
Mozilo, 69, is a native New Yorker and son of a butcher. He graduated from Fordham University in the Bronx in 1960. While in high school, he took a job at a mortgage company and learned the trade as a messenger and file clerk.
Mozilo went to work full time in the mortgage industry right out of college. His first success came during the population boom at Cape Canaveral, Fla., in the 1960s after President John F. Kennedy's announced goal of putting a man on the moon. He wrote loans for aerospace engineers who descended on the cape to work for NASA, and eventually underwrote home loans across Florida.
In 1969, Mozilo launched Countrywide in Calabasas, Calif., with David Loeb, a former boss and mentor. They had a novel storefront business plan that tried to simplify the mortgage process and replace salesmen with bank-like customer service.
Mozilo said that every American who wanted to buy a home ought to be able to buy one -- a sentiment that led to millions of borrowers in recent years getting mortgages they could not afford.
Fortune magazine ranked Mozilo as the 13th-highest-paid male executive in 2006, with a total compensation of $43 million. He does not crack Forbes's list of the 400 richest Americans, however, meaning that his net worth is less than $1.3 billion.
His contract as chairman of Countrywide runs through the end of next year, and he is expected to continue as a non-employee chairman of the board until the end of 2011. During that time, he will receive a director's salary, plus $200,000 a year, office space and the use of the corporate jet for business trips. His country-club dues will also be paid.
Even if Mozilo is fired as chairman, he would receive $400,000 a year to consult until the end of 2011.
Mozilo can expect pressure from shareholders and members of Congress to part with some of his compensation.
In a written statement yesterday, House Financial Services Committee Chairman Barney Frank (D-Mass.) said Mozilo, "who will be profiting from this transaction personally," should "donate a substantial portion of the $150 million he has collected over the last several years to nonprofits and other institutions that are helping us deal with the problem he helped to create."
Countrywide's stock price has fallen 79 percent in the past year, and the Securities and Exchange Commission has been looking at Mozilo's stock sales during the decline. He has said he did nothing wrong.
Mozilo holds an honorary doctorate from Pepperdine University, has been on the board of Home Depot and is a member of the board of trustees of Gonzaga University.
Staff researcher Richard Drezen contributed to this report.